Archive for August, 2022

Why your business should implement e-Invoicing

August 15th, 2022 by Heather Maloney

It’s official: theft/fraud by redirecting payments to the scammer’s bank account increased by 77% year on year, in 2021.  Invoice scams cost Australian businesses $227 Million.  This article by the ACCC describes the problem in more detail.

In response to increased invoicing fraud, a global framework for e-procurement (including e-invoicing) has been developed, called PEPPOL.  The Australian Government is encouraging Australian businesses to implement e-invoicing.  The ATO has been appointed as the body to the authority to manage the framework within Australia.  (NB: this doesn’t mean the ATO can see anything about your e-invoices).

Currently it is not mandatory that Australian businesses use e-invoicing, but it is possible that it will become mandatory in future.

Why implement e-Invoicing?

You should consider implementing e-invoicing because:

  • It will reduce your likelihood of being the victim of invoice scams, which trick you into paying your supplier into the wrong bank account.
  • It will reduce data entry – your payables are automatically entered into your accounting software rather than needing any re-keying by your Accounts Payable staff.
  • It may increase payment speed.  If you are transacting with Australian federal government agencies, you will be paid within 5 days of issuing the agency with an e-invoice.

If you are using a cloud-based accounting software it is likely to be free and easy for you to setup for e-invoicing.  For example, through Xero you can register for e-invoicing.  Then when a supplier sends you an e-invoice it will automatically appear as a draft Bill inside your Xero account, and when you send an invoice to a customer who supports e-invoicing, you can simply choose the option to send e-invoice (only visible in the new Xero invoice view).  The setup process is described in more detail in this YouTube video: Send and receive eInvoices (AU) – YouTube.

What is e-Invoicing?

e-Invoicing is not the same as emailing an invoice in PDF format from your accounting software to your customers.  An e-invoice is an electronic representation of the data that comprises and invoice, which is sent from one financial system automatically into another.

Essentially how e-invoicing works is that businesses are registered to participate in the PEPPOL network, linked to their ABN.  Participating businesses can then send invoices to other participating businesses using accounting software that has been PEPPOL enabled.  Accounting software vendors are responsible for implementing the security and connectivity required to participate in the PEPPOL network, ensuring that you can rely on the secure exchange of e-invoice data. You can expect all popular cloud-based accounting software will be PEPPOL connected in the near future.

After creating an invoice in your PEPPOL connected accounting system, you will be able to search for participating businesses via their ABN (if they are Australian businesses) or by the country identifier for international companies, and then send the invoice to the supplier via the PEPPOL network, causing your invoice to arrive immediately in their finance software.  At the moment PEPPOL is more commonly used throughout Europe, but Australia, New Zealand and Singapore are more recent adopters.

What next?

Contactpoint is now setup for e-invoicing through our use of Xero.  We will be in contact with our clients in the near future, to switch over to delivering e-invoices for all who are registered in the PEPPOL network.

Below are further resources to assist you with regard to setting up for e-Invoicing:

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